Yale Budget Lab Projects Revenue Loss for Internal Revenue Service
What happened
Yale Budget Lab projected that the Internal Revenue Service (IRS) experienced a significant revenue loss during the fiscal year 2025. Audit collections at the IRS dropped 35% in fiscal 2025 compared to fiscal 2024, totaling a $3.5 billion decline from the previous year's $6.5 billion in collections. This revenue decline coincided with staffing cuts, which reduced the enforcement and collections headcount to 17,517 employees by January 2026, down from a peak of 27,217 at the end of fiscal 2024.
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Why it matters
The cuts disproportionately affected high-income and complex returns, leading to the loss of over 3,600 revenue agents. This reduction in enforcement capacity raises questions about how the federal government will be funded as the tax base shrinks and experienced examiners retire.
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Who's involved
- YaleConducted the research projecting the revenue loss for the IRS.
- Internal Revenue ServiceThe US agency whose operational budget and tax collection capacity are impacted by the revenue decline.
- CongressThe entity that controls the IRS's operational scope and budget through legislative action.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- CongressSpeculative
The revenue loss could impact the tax base and the operational budget of the IRS.
How this reaches others
Each traced step by step, with the reporting behind itKeep exploring
The entities involved
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Yale
Canadian political candidate
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Internal Revenue Service
US agency administering IRA tax credits (Sections 45Y, 48E, 6417, 6418) material to Vineyard Wind 1 and Avangrid's onshore portfolio.